Dear shareholders,
I am pleased to present the remuneration committee report for the year ended 31 December 2023. The committee recognises the value of Exxaro's people in powering possibility, and strives to balance stakeholder interests with our commitment to fair and reasonable pay.
Dr Phumla Mnganga
Remuneration committee chairperson
The committee benefits from cross-membership with the nomination committee to fulfil remuneration matters and board governance and nomination matters. The terms of reference require the committee to comprise at least three non-executive directors, the majority being independent and the board chairperson being an ex officio member.
The board ensures committee members have a suitably balanced blend of skills and experience to enable the committee to discharge its functions, on recommendation from the nomination committee.
The committee comprises a majority of independent non-executive directors and there were no changes to the committee's membership in 2023.
The CEO, finance director and chief people and performance officer attend meetings as standing invitees to make submissions and provide information required by the committee.
Refer to our board of directors for members' qualifications and experience, and to the remuneration report.
Gender and racial diversity
The committee met formally six times during 2023 at four quarterly meetings and two special meetings. The following table details members' attendance at meetings held during 2023:
| Members | Designation | Attendance
at quarterly meetings |
Attendance
at special meetings |
| Dr Phumla Mnganga | Independent non-executive director and remuneration committee chairperson | 4/4 | 2/2 |
| Geraldine Fraser-Moleketi | Lead independent non-executive director | 3/4 | 2/2 |
| Zwelibanzi Mntambo | Non-executive director | 4/4 | 1/2 |
| Mvuleni Geoffrey Qhena | Independent non-executive director | 4/4 | 2/2 |
This committee's role and responsibility is to ensure the group remunerates fairly, responsibly and transparently so as to promote the achievement of strategic objectives and positive outcomes in the short, medium and long term. It also ensures the continuous development, review and implementation of remuneration governance-related documents, including compliance with JSE Listings Requirements and reporting obligations.
The committee is accountable to the board for executing its independent and objective oversight. The committee does not assume the functions of management, which remain the responsibility of executives, prescribed officers and other members of senior management, nor accountability for the functions performed by other board committees.
Where board committee focus areas overlap with this committee's focus areas, committees collaborate to execute the board's broader effectiveness objective. For example, in support of the DEI strategy execution, as it applies to fair pay or application of mechanisms to achieve and exceed employment equity.
The committee's terms of reference were reviewed in 2023 and amendments were approved by the board. The terms of reference continue to align with legislation, regulations, the company's MoI, King IV and in accordance with the requirements of a JSE-listed company.
As there is no regulatory requirement to conduct an annual external independent performance assessment, while King IV recommends regular performance evaluations for all board committees, it is a governance practice at Exxaro to conduct such independent assessments every second year.
At the end of 2023, we conducted an internal evaluation of the committee's performance and effectiveness in accordance with King IV recommendations. The evaluation aimed to identify and record areas needing strengthening or refinement while considering internal and external dynamics and factors that may positively or negatively impact the committee's ability to enhance its performance and effectiveness in these areas. The assessment concluded that the committee functions effectively.
| Key highlights | Material themes |
| Proactively engaged with shareholders at the annual board governance roadshow to outline Exxaro's long-term value creation leveraging ESG for business resilience and sustainability, with a focus by the committee chairperson on linking remuneration to performance and our pathway in reducing the wage gap |  |
| Revised the remuneration policy and approved a wage gap statement of intent and principles as part of our wage gap journey | |
| Approved the STI design changes and harmonised the integration of Cennergi variable pay strategies while sustaining alignment with market benchmarks | |
| Recommended the appointment of managing director: energy, chief growth officer, chief strategic resilience and governance officer, and chief people and performance officer from a remuneration perspective |  |
| Oversaw implementation of our pay parity in support of fair and responsible remuneration | |
| Approved the consolidation of the Exxaro pension and provident funds to harmonise and simplify retirement funding arrangements | |
| Reviewed our employee benefits offering | |
This committee is responsible for good governance in respect of remuneration matters, and flowing from the key focus areas of 2023, the following is reported:
King IV's "say on pay" recommendations became mandatory with it being incorporated into the JSE Listings Requirements. JSE- listed companies are required to table non-binding advisory shareholder votes on remuneration at AGMs.
In September 2023, Exxaro held its annual governance roadshow to ensure proactive engagement with shareholders. This engagement occurs annually although support was received from shareholders through a non-binding advisory vote at the AGM held 18 May 2023 for the remuneration policy and implementation report.
| Outcomes of two non-binding advisory votes at the AGM on 18 May 2023 | For | Against |
| Non-binding advisory vote number 1: Approval of the Exxaro remuneration policy | 93.55% | 6.45% |
| Non-binding advisory vote number 2: Endorsement of the implementation of the Exxaro remuneration policy | 82.51% | 17.49% |
In terms of the JSE Listings Requirements paragraph 3.84(j), if either the remuneration policy or the implementation report or both are voted against by 25% or more of the votes exercised at the AGM, the board must invite dissenting shareholders to engage with Exxaro and provide the manner and timing of such engagement in the voting results announcement.
The board remains committed to meaningful engagements with stakeholders regardless of the outcome of the non-binding advisory vote.
The committee considered talent management delivery areas, successes and identified risks in giving effect to our Social Impact strategy.
The people strategy is under review and is anticipated to be presented to this committee early in 2024. Following this review, our talent management strategy will be reviewed and updated.
Horizontal pay gaps were closed in 2022 when the committee approved an additional mandate outside the reward allocation process. With the 2023 salary benchmarks, any fair pay adjustments were effected as part of the reward allocation process within the approved mandate.
The committee mandated the wage gap project to verify whether Exxaro's wage gap is well positioned in the market and to ensure that our employee value proposition is responsive to the current societal challenges and economic pressures.
The committee developed and approved a wage gap statement of intent. The statement is linked to Exxaro's purpose and identified wage gap principles and is aligned with Exxaro's revised remuneration policy. We have calculated our vertical and horizontal pay ratios relative to both the mining industry and the general market and will continue to monitor this and take appropriate action where necessary. Fair pay is a foundational enabler of DEI, which remains a strategic priority.
Exxaro is committed to our purpose of powering better lives in Africa and beyond. Guided by our DEI objectives, we strive to deliver on our commitment to fair and responsible pay and effective remuneration practices to ultimately ensure Exxaro's sustainability for all our stakeholders.
In line with our values of empowered to grow and contribute, teamwork, committed to excellence and honest responsibility, we demonstrate our commitment by disclosing the wage gap between our highest and lowest paid employees in the prescribed manner.
We enhanced our total reward framework by outlining monetary and non-monetary elements. Our reward strategy aligns with our people strategy and business strategy. In executing the framework, we emphasise organisational effectiveness to maximise Exxaro's performance and increase shareholder returns.
Our STI schemes comprise the GIS and LOS scheme. The schemes are embedded in the business, and we made payments in line with the rules at group and BU levels.
Our LTI awards and vesting followed the shareholder-approved rules based on the achievement of the performance conditions (ROCE, TSR and ESG).
The committee is satisfied that there is a clear link between the LTI and STI regarding implementing the Exxaro strategy, capital allocation and operational performance.
The minimum shareholding requirement (MSR) policy was implemented in 2021.
In terms of the committee's annual work plan, it reviews performance conditions at the end of each performance period to evaluate whether the performance conditions were met or not. The allocations were assessed to be in line with the LTI plan (LTIP) scheme rules for inactive or good leaver participants and the committee approved vesting of the share-based awards.
Succession planning processes are robust and support the development of leadership and succession pipeline.
The senior talent pipeline was presented for consideration to the committee, using an organisational planning matrix.
We continue to take our shareholders with us in responsible remuneration practices. The chairperson of the remuneration committee and other board and executive representatives attended the Exxaro annual governance roadshow in September 2023.
The key engagement themes identified related to progress on our wage gap initiatives, the STI and LTI performance conditions and our performance. The topic of remuneration usually attracts numerous questions as shareholders wish to clarify their understanding of Exxaro's structures and management practices. However, the general observation was that shareholders seemed content with the feedback.
The committee requested management to annually present their responses and consideration to shareholder comments received, and in some instances action on shareholder comments to enable the committee to have visibility and to ensure it was satisfied with the response and execution thereof.
Key focus areas 2023/2024
| Continuing our wage gap journey, tracking our pay ratios and monitoring appropriate interventions |
| Embedding the new STI and LTI schemes in our Cennergi business |
| Monitoring compliance with the MSR policy for all executives |
| Reviewing Exxaro's LTIP rules and performance conditions |
| Reviewing our recognition policy and programme |
| Ongoing consideration and deliberation of shareholder feedback |
| Reviewing benefits and allowances |
The committee is satisfied that its ongoing work aims to align remuneration with Exxaro's values of fairness and equity. Exxaro will continue striving towards remunerating employees in accordance with market-related salaries and equitable awards across the organisation.
The committee is satisfied that employees are invested in achieving the company's strategic goals through a remuneration philosophy and policies that incentivise short-term and long-term performance awards with sufficient stretch built into targets.
Dr Phumla Mnganga
Remuneration committee chairperson
10 April 2024
Report Index
IR